Nigeria’s inflation rate may not rise as high this year as the central bank previously forecast after the government cut a gasoline subsidy, Governor Lamido Sanusi said.
Inflation in Africa’s top oil producer may peak this month or in September before declining toward the end of the year, he told reporters yesterday in Abuja, the capital. Inflation was little changed at 12.8 percent in July, below the median estimate of 13.9 percent in a Bloomberg News survey. The Central Bank of Nigeria had previously forecast it would reach as high as 14.5 percent in the third quarter.
The central bank has kept its policy rate unchanged at a record 12 percent this year, after raising it by 5.75 percentage points in 2011 to curb price pressures.
“The tightening of monetary policy has been very effective in terms of keeping the exchange rate fairly within the band,” which damps down the impact of imported inflation, Sanusi said. The bank sells foreign currency at a biweekly auction to keep the naira within a 3 percent band around 155 per dollar.
Nigeria’s foreign-currency reserves have reached more than $40 billion “for the first time in a long time,” Sanusi said. “We hope if we can build up the reserves, maintain a fairly stable exchange rate, and we see inflation come down, then we can look at the situation in the next 2-4 months.”
As the inflation rate is expected to remain above the central bank’s target of below 10 percent, “we do not expect any monetary policy rate cuts in the short term,” Yvonne Mhango, an economist at Renaissance Capital in Johannesburg, said in an e-mailed response to questions.
The naira has gained 2.4 percent in interbank trading this year, reaching 158.4 against the dollar as of 11:50 a.m.